The Associated Press March 31, 2010, 10:01AM ET

Goodrich sees health reform tax charge of $10M

Aerospace supplier Goodrich Corp. on Wednesday became the latest large company to announce an earnings hit due to the recently passed health care reform legislation.

The Charlotte company said it will incur a one-time charge of about $10 million, or 8 cents per share, in the first quarter.

Last week, three major companies -- Deere & Co., Caterpillar Inc. and Valero Energy -- said they expect to take a total hit of $265 million to account for smaller tax deductions as a result of reform changes.

Under reform, companies will be prohibited starting in 2011 from writing off a federal subsidy that covers part of the cost of retiree prescription drug coverage. The government provides the subsidies so companies will continue providing coverage to retirees, which keeps them off of government-funded Medicare Part D.

Companies have said the tax increase could significantly raise government health care costs because companies may drop their retiree coverage.

White House spokesman Robert Gibbs has said the original provision allowing companies to deduct the federal subsidies from their taxable income was a "loophole" that will be closed by the health care overhaul. The tax changes are expected to raise roughly $4.5 billion for the government over the next decade to help pay for the health overhaul.

In morning trading, Goodrich shares fell 2 cents to $71.52.


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